Commonhold and Leasehold Reform Bill [H.L.] - continued        House of Lords
PART II, LEASEHOLD REFORM - continued

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  CHAPTER V
  OTHER PROVISIONS ABOUT LEASES
 
Service charges, administration charges etc.
Extending meaning of service charge and management etc.     138. Schedule 9 (which amends certain provisions about management of, and service charges in respect of, leasehold properties and confers power further to amend certain of those provisions) has effect.
 
Consultation about service charges.     139. For section 20 of the 1985 Act (limitation of service charges: estimates and consultation) substitute-
 
 
"Limitation of service charges: consultation requirements.     20. - (1) Where relevant costs have been incurred under a long term agreement, those costs shall not be taken into account in determining the amount of a service charge unless the consultation requirements have been either-
 
    (a) complied with, or
 
    (b) dispensed with by a leasehold valuation tribunal in accordance with subsection (6);
       and the amount payable shall be limited accordingly.
 
      (2) A long term agreement is an agreement entered into, by or on behalf of the landlord or a superior landlord, for a term of more than twelve months; but an agreement which would otherwise be a long term agreement is not one-
 
 
    (a) if it is an agreement of a description prescribed by regulations made by the Secretary of State, or
 
    (b) in any circumstances so prescribed.
      (3) Where-
 
 
    (a) relevant costs incurred on carrying out qualifying works are not required to be left out of account by subsection (1), but
 
    (b) the amount of those costs to which any of the tenants may be required under the terms of his lease to contribute by the payment of a service charge exceeds an amount prescribed by regulations made by the Secretary of State,
       subsections (4) and (5) apply.
 
      (4) The excess shall not be taken into account in determining the amount of a service charge unless the consultation requirements have been either-
 
 
    (a) complied with, or
 
    (b) dispensed with by (or on appeal from) a leasehold valuation tribunal in accordance with subsection (6);
       and the amount payable shall be limited accordingly.
 
      (5) And the manner in which subsection (4) is given effect to is by limiting the amount to which the tenant concerned may be required under the terms of his lease to contribute by the payment of the service charge.
 
      (6) An application may be made to a leasehold valuation tribunal for a determination to dispense with all or any of the consultation requirements in relation to any service charge; and the tribunal may make the determination if satisfied that the landlord acted reasonably.
 
      (7) In this section "the consultation requirements" means requirements prescribed by regulations made by the Secretary of State.
 
      (8) The regulations may in particular include provision requiring the landlord-
 
 
    (a) to provide details of proposed agreements or works to tenants by whom the service charge is payable or the recognised tenants' association representing them,
 
    (b) to obtain estimates for proposed agreements or works,
 
    (c) to invite such tenants or association to obtain other estimates,
 
    (d) to have regard to observations made by such tenants or association in relation to proposed agreements or works and estimates, and
 
    (e) to give reasons in prescribed circumstances for entering into agreements.
      (9) Regulations under this section-
 
 
    (a) may make provision generally or only in relation to specific cases, and
 
    (b) may make different provision for different purposes.
      (10) Regulations under this section shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.
 
      (11) In this section "qualifying works", in relation to a service charge, means works (whether on a building or on any other premises) to the costs of which the tenant by whom the service charge is payable may be required under the terms of his lease to contribute by the payment of such a charge."
 
Liability to pay service charges: jurisdiction.     140. - (1) After section 27 of the 1985 Act insert-
 
 
"Liability to pay service charges: jurisdiction.     27A. - (1) Where an amount is alleged to be payable by way of service charge, an application may be made to a leasehold valuation tribunal for a determination whether or not any amount is so payable and, if it is, as to-
 
    (a) the person by whom it is payable,
 
    (b) the person to whom it is payable,
 
    (c) the amount which is payable,
 
    (d) the date at or by which it is payable, and
 
    (e) the manner in which it is payable.
      (2) An application may also be made to a leasehold valuation tribunal for a determination whether, if costs were incurred for services, repairs, maintenance, improvements, insurance or management of any specified description, a service charge would be payable for the costs and, if it would, as to-
 
 
    (a) the person by whom it would be payable,
 
    (b) the person to whom it would be payable,
 
    (c) the amount which would be payable,
 
    (d) the date at or by which it would be payable, and
 
    (e) the manner in which it would be payable.
      (3) No application under subsection (1) or (2) may be made in respect of a matter which-
 
 
    (a) has been agreed or admitted by the tenant,
 
    (b) has been, or is to be, referred to arbitration pursuant to a post-dispute arbitration agreement to which the tenant is a party,
 
    (c) has been the subject of determination by a court, or
 
    (d) has been the subject of determination by an arbitral tribunal pursuant to a post-dispute arbitration agreement.
      (4) An agreement by the tenant of a dwelling (other than a post-dispute arbitration agreement) is void in so far as it purports to provide for a determination-
 
 
    (a) in a particular manner, or
 
    (b) on particular evidence,
       of any question which may be the subject of an application under subsection (1) or (2).
 
      (5) The jurisdiction conferred on a leasehold valuation tribunal in respect of any matter by virtue of this section is in addition to any jurisdiction of a court in respect of the matter."
 
      (2) In section 38 of the 1985 Act (definitions), at the end of the definitions of "arbitration agreement", "arbitration agreement" and "arbitral tribunal", insert "and "post-dispute arbitration agreement", in relation to any matter, means an arbitration agreement made after a dispute about the matter has arisen;".
 
      (3) In section 39 of the 1985 Act (index of defined expressions), in the first column, in the entry "arbitration agreement, arbitration agreement and arbitral tribunal", for "and arbitral tribunal" substitute ", arbitral tribunal and post-dispute arbitration agreement".
 
Administration charges.     141. Schedule 10 (which makes provision about administration charges payable by tenants of dwellings) has effect.
 
 
Ground rent
Requirement to notify long leaseholders that rent is due.     142. - (1) A tenant under a long lease of a dwelling is not liable to make a payment of rent under the lease unless the landlord has given him a notice relating to the payment; and the date on which he is liable to make the payment is that specified in the notice.
 
      (2) The notice must specify-
 
 
    (a) the amount of the payment,
 
    (b) the date on which the tenant is liable to make it, and
 
    (c) if different from that date, the date on which he would have been liable to make it in accordance with the lease,
       and shall contain any such further information as may be prescribed.
 
      (3) The date on which the tenant is liable to make the payment must not be-
 
 
    (a) either less than 30 days or more than 60 days after the day on which the notice is given, or
 
    (b) before that on which he would have been liable to make it in accordance with the lease.
      (4) If the date on which the tenant is liable to make the payment is after that on which he would have been liable to make it in accordance with the lease, any provisions of the lease relating to non-payment or late payment of rent have effect accordingly.
 
      (5) The notice-
 
 
    (a) must be in the prescribed form, and
 
    (b) may be sent by post.
      (6) If the notice is sent by post, it must be addressed to a tenant at the dwelling unless he has notified the landlord in writing of a different address in England and Wales at which he wishes to be given notices under this section (in which case it must be addressed to him there).
 
      (7) In this section "rent" does not include-
 
 
    (a) a service charge (within the meaning of section 18(1) of the 1985 Act), or
 
    (b) an administration charge (within the meaning of Part I of Schedule 10 to this Act).
      (8) In this section-
 
 
    "dwelling" has the same meaning as in the 1985 Act,
 
    "long lease", "landlord" and "tenant" have the same meanings as in Chapter I of this Part, and
 
    "prescribed" means prescribed by regulations made by the appropriate national authority.
 
Forfeiture of leases of dwellings
No forfeiture notice before determination of breach.     143. - (1) A landlord under a long lease of a dwelling may not serve a notice under section 146(1) of the Law of Property Act 1925 (restriction on forfeiture) in respect of a breach by a tenant of a covenant or condition in the lease unless subsection (2) is satisfied.
 
      (2) This subsection is satisfied if-
 
 
    (a) it has been finally determined on an application under subsection (4) that the breach has occurred,
 
    (b) the tenant has admitted the breach, or
 
    (c) a court in any proceedings, or an arbitral tribunal in proceedings pursuant to a post-dispute arbitration agreement, has finally determined that the breach has occurred.
      (3) But a notice may not be served by virtue of subsection (2)(a) or (c) until after the end of the period of 14 days beginning with the day after that on which the final determination is made.
 
      (4) A landlord under a long lease of a dwelling may make an application to a leasehold valuation tribunal for a determination that a breach of a covenant or condition in the lease has occurred.
 
      (5) But a landlord may not make an application under subsection (4) in respect of a matter which-
 
 
    (a) has been, or is to be, referred to arbitration pursuant to a post-dispute arbitration agreement to which the tenant is a party,
 
    (b) has been the subject of determination by a court, or
 
    (c) has been the subject of determination by an arbitral tribunal pursuant to a post-dispute arbitration agreement.
Section 143: supplementary.     144. - (1) An agreement by a tenant under a long lease of a dwelling (other than a post-dispute arbitration agreement) is void in so far as it purports to provide for a determination-
 
 
    (a) in a particular manner, or
 
    (b) on particular evidence,
       of any question which may be the subject of an application under section 143(4).
 
      (2) For the purposes of section 143 it is finally determined that a breach of a covenant or condition in a lease has occurred-
 
 
    (a) if a decision that it has occurred is not appealed against or otherwise challenged, at the end of the period for bringing an appeal or other challenge, or
 
    (b) if such a decision is appealed against or otherwise challenged and not set aside in consequence of the appeal or other challenge, at the time specified in subsection (3).
      (3) The time referred to in subsection (2)(b) is the time when the appeal or other challenge is disposed of-
 
 
    (a) by the determination of the appeal or other challenge and the expiry of the time for bringing a subsequent appeal (if any), or
 
    (b) by its being abandoned or otherwise ceasing to have effect.
      (4) In section 143 and this section "long lease of a dwelling" does not include-
 
 
    (a) a tenancy to which Part II of the Landlord and Tenant Act 1954 (business tenancies) applies,
 
    (b) a tenancy of an agricultural holding within the meaning of the Agricultural Holdings Act 1986 in relation to which that Act applies, or
 
    (c) a farm business tenancy within the meaning of the Agricultural Tenancies Act 1995.
      (5) In section 143 and this section-
 
 
    "arbitration agreement" and "arbitral tribunal" have the same meaning as in Part I of the Arbitration Act 1996 and "post-dispute arbitration agreement", in relation to any breach (or alleged breach), means an arbitration agreement made after the breach has occurred (or is alleged to have occurred),
 
    "dwelling" has the same meaning as in the 1985 Act,
 
    "long lease" has the meaning given by sections 73 and 74 of this Act, except that a shared ownership lease is a long lease whatever the tenant's total share, and
 
    "landlord" and "tenant" have the same meaning as in Chapter I of this Part.
      (6) Section 146(7) of the Law of Property Act 1925 applies for the purposes of section 143 and this section.
 
      (7) Nothing in section 143 affects the service of a notice under section 146(1) of the Law of Property Act 1925 in respect of a failure to pay-
 
 
    (a) a service charge (within the meaning of section 18(1) of the 1985 Act), or
 
    (b) an administration charge (within the meaning of Part I of Schedule 10 to this Act).
Forfeiture for failure to pay service charge etc.     145. - (1) Section 81 of the Housing Act 1996 (restriction on forfeiture for failure to pay service charge) is amended as follows.
 
      (2) In subsection (1), for the words from "to pay" to the end substitute"by a tenant to pay a service charge or administration charge unless-
 
 
    (a) it is finally determined by (or on appeal from) a leasehold valuation tribunal or by a court, or by an arbitral tribunal in proceedings pursuant to a post-dispute arbitration agreement, that the amount of the service charge or administration charge is payable by him, or
 
    (b) the tenant has admitted that it is so payable."
      (3) For subsection (2) substitute-
 
 
    "(2) The landlord may not exercise a right of re-entry or forfeiture by virtue of subsection (1)(a) until after the end of the period of 14 days beginning with the day after that on which the final determination is made."
 
      (4) For subsection (3) substitute-
 
 
    "(3) For the purposes of this section it is finally determined that the amount of a service charge or administration charge is payable-
 
 
    (a) if a decision that it is payable is not appealed against or otherwise challenged, at the end of the time for bringing an appeal or other challenge, or
 
    (b) if such a decision is appealed against or otherwise challenged and not set aside in consequence of the appeal or other challenge, at the time specified in subsection (3A).
      (3A) The time referred to in subsection (3)(b) is the time when the appeal or other challenge is disposed of-
 
 
    (a) by the determination of the appeal or other challenge and the expiry of the time for bringing a subsequent appeal (if any), or
 
    (b) by its being abandoned or otherwise ceasing to have effect."
      (5) After subsection (4) insert-
 
 
    "(4A) References in this section to the exercise of a right of re-entry or forfeiture include the service of a notice under section 146(1) of the Law of Property Act 1925 (restriction on re-entry or forfeiture)."
 
      (6) In subsection (5), after "this section" insert-
 
 
    "(a) "administration charge" has the meaning given by Part I of Schedule 10 to the Commonhold and Leasehold Reform Act 2001,
 
    (b) "arbitration agreement" and "arbitral tribunal" have the same meaning as in Part I of the Arbitration Act 1996 and "post-dispute arbitration agreement", in relation to any matter, means an arbitration agreement made after a dispute about the matter has arisen,
 
    (c) "dwelling" has the same meaning as in the Landlord and Tenant Act 1985, and
 
    (d) ".
 
Crown application
Application to Crown.     146. - (1) The following provisions apply in relation to land in which there is a Crown interest-
 
 
    (a) sections 18 to 30B of (and the Schedule to) the 1985 Act (service charges, insurance and managing agents),
 
    (b) section 42 (service charges to be held in trust) and sections 46 to 49 (information to be furnished to tenants) of the 1987 Act,
 
    (c) Chapter V of Part I of the 1993 Act (management audit),
 
    (d) section 81 of the Housing Act 1996 (restriction on termination of tenancy for failure to pay service charge etc.),
 
    (e) section 84 of (and Schedule 4 to) that Act (right to appoint surveyor), and
 
    (f) in this Chapter, the provisions relating to any of the provisions within paragraphs (a) to (e), Part I of Schedule 10 and sections 142 to 145.
      (2) There is a Crown interest in land if there is an interest or estate in the land-
 
 
    (a) which is comprised in the Crown Estate,
 
    (b) which belongs to Her Majesty in right of the Duchy of Lancaster,
 
    (c) which belongs to the Duchy of Cornwall, or
 
    (d) which belongs to a government department or is held on behalf of Her Majesty for the purposes of a government department.
      (3) No failure by the Crown to perform a duty imposed by section 21, 22 or 23 of, or by or by virtue of paragraph 2, 3 or 4 of the Schedule to, the 1985 Act makes the Crown criminally liable; but the High Court may declare any such failure without reasonable excuse to be unlawful.
 
 
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